Peroxisome proliferator-activated receptor γ (PPARγ) is induced in leptin-deficient (ob/ob) mouse liver and is critical for the development of hepatic steatosis. The present study shows that fat-specific protein 27 (Fsp27) in ob/ob liver is a direct target gene of PPARγ and can elevate hepatic triglyceride levels. FSP27 belongs to the CIDE family, composed of CIDE A, CIDE B, and FSP27/CIDE C, all of which contain a conserved CIDE-N domain. FSP27 was recently reported to be a lipid droplet-binding protein and to promote lipid accumulation in adipocytes. The Fsp27 gene was expressed at high levels in ob/ob liver and at markedly lower levels in ob/ob livers lacking PPARγ. Forced expression of FSP27 by adenovirus in hepatocytes in vitro or in vivo led to increased triglyceride levels. Knockdown by adenovirus expressing FSP27 shRNA resulted in lower accumulation of hepatic triglycerides compared to control adenovirus-infected liver. Taken together, these results indicate that FSP27 is a direct mediator of PPARγ-dependent hepatic steatosis.